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APRIL 19, 2018

Good morning and greetings from the Maritime Administration and the U.S. Department of Transportation. It’s great to be here with the membership of the American Waterways Operators.

I’ve attended a number of inland waterways events since I came to MARAD in August, and have been getting up to speed about some of the critical issues tied to our nation’s inland maritime assets.

After a 34-year career in the Navy, most of them spent commanding big ships at sea, I am reminded almost daily of how strategic these natural inland waterborne highways are to our national security and economic prosperity.

America’s tugboat, towboat and barge industry is, in turn, an essential part of our nation’s maritime and freight transportation system – one of the safest and economical modes of freight transportation.

MARAD values its long-standing partnership with the AWO, and I look forward to getting to know this important group of stakeholders.
A recent milestone in our partnership was commissioning a study on the economic impact of the tugboat, towboat and barge industry. That Price-Waterhouse-Coopers study confirmed the importance of your industry to our economy and to American jobs.

It detailed how water transport uses 75 percent less energy than trucks and 31 percent less than rail to haul a ton of freight. And it confirmed that the tugboat, towboat and barge industry is directly responsible for more than 50,000 jobs.

And it supports these jobs while transporting 69 percent of the lumber, stone and ore — nearly 83 percent of petroleum and petroleum products — and 90 percent of coal moved by water on a nationwide basis.

I was impressed to learn that your industry, both directly and indirectly, supported more than 300,000 jobs and $33.8 billion in GDP in 2014.

That’s great news for our industry at a time when we’re facing more than our share of challenges.

Today we have the lowest number of U.S.-flag ships sailing internationally than we’ve ever had in modern times – a tiny fraction of the total number of ships moving freight on the seas.

That rapid decline has created an even more troubling chain reaction. With the resulting loss of jobs, we’re now facing a severe shortage of qualified mariners needed to pilot these big oceangoing ships in a military crisis. In fact, we may not have enough at this very moment to support an extended conflict overseas.

That keeps me up at night. So it’s with a lot of optimism that I commend your industry, and the American Waterways Operators, for its outstanding work, planning and collaboration to maintain its strength and viability in a challenging time.

The towboat and barge sector could rightfully be called the backbone of the maritime industry. As that study showed, it boosts our nation’s economy and the commercial health of many, many communities around this country.

What many people don’t realize is that your members have also historically led the charge in marine safety and environmental stewardship.

I’m talking about Subchapter M, published two summers ago by the United States Coast Guard. It was completed in tandem with the Towing Safety Advisory Committee (TSAC), the American Waterways Operators (AWO), and hundreds of maritime leaders and experts across this country.

It’s ready to be implemented in July and may be the most important rulemaking tool ever for the tug and towboat industry. It will take marine safety and environmental stewardship in the towing industry to the next level.

That 820-page document took 12-years to complete but was well worth the time and effort. What impressed me most is that you initiated it on your own.
You didn’t wait until there was a major accident or disaster– or until some act of Congress forced it on you. You took a pretty safe, if largely unregulated industry, and in 12 years produced a systematic body of rules to make it even safer.
This is the formula for success if the greater maritime sector is going to survive – much less thrive – in the 21st century.

So to all of you throughout the industry who participated and brought Subchapter M to fruition. . . Congratulations and job well done.

Now the hard work begins of implementing the new standards and making them work in practice. If the past is any indicator, you will not only succeed, but your industry will continue to benefit the American people with safer waterways, quality jobs and commercial vitality. Good work!

Now I’d like to share some other recent good news with you all. Three weeks ago MARAD received its largest budget in history. At $979.6 million for fiscal year 2018, it’s nearly a half-a-billion-dollar increase over our 2017 budget.

Within that, Congress provided $300 million dollars this year to build a new training ship for SUNY Maritime College.

This will be a new class of National Security Multi-Mission Vessel to bring our training operations up-to-date and prepare our young mariners for the 21st century. And it’s going to be built in a U.S. shipyard.

Congress also provided $45 million in funding for capital improvements at the U.S. Merchant Marine Academy – an increase of $34 million over FY 2017. And our state maritime academies received $32 million for a range of important programs. That’s an increase of $3 million over FY 2017.

These funds will go toward training the young mariners who will serve our military, strengthen our national security, and crew our commercial shipping industry and U.S. Merchant Marine in the years ahead.

And as you’ve probably heard, most of the 46 vessels currently in the Ready Reserve Force, or RRF, have reached the end of their service life.

That fleet provides the bulk of our government-owned surge sealift capacity and needs to be recapitalized.  $289.3 million in funding to MARAD from the Department of Defense in FY 2018 will allow for service- life extensions.

The numbers are encouraging, but we all know the maritime industry, at its best, is a diverse, interconnected, multi-modal enterprise closely integrated with landside transportation modes. The waterways part of the equation also faces the challenges of an aging and often outmoded maritime infrastructure.
The President’s proposed $1 trillion infrastructure package – which includes the nation’s ports and waterways – intends to unleash private investment by incentivizing public-private partnerships. It will also streamline processes to reduce the amount of time and money required to complete major infrastructure projects.

While this plan is still being unpacked, I can report that $1.5 billion in Tiger Grants are being awarded this year, some of which will be translated into port upgrades and expansions.

There’s also another $20 million available in small shipyard grants, a portion of which will impact waterways operators and facilitate maritime infrastructure projects. The notice of funding opportunity just went out, so stay tuned on that.

And I’m sure you have heard we received $7 million for the Marine Highway Grant Programs.  The notice of funding opportunity should be out before summer.

I know you’re waiting to hear my take on the future of the Jones Act. I don’t have to tell anyone here that the Jones Act– along with the Maritime Security Program (MSP) and Cargo Preference— is a critical part of the equation for a healthy domestic and international U.S. maritime industry moving forward.

They’re the Three Pillars that keep our U.S.-flag fleet and merchant marine economically viable, adequately crewed by qualified American mariners, and ready to respond in an emergency.

The Jones Act has a direct economic bearing on what everyone gathered in this room does for a living.  Its U.S.-build, ownership, and crew requirements support mariner jobs and give us access to domestic maritime assets needed in times of war or national emergency.

It also serves national security priorities by supporting U.S. shipyards and repair facilities that produce and repair American-built ships.

Since I came on board at MARAD in August, just a little over seven months ago, the Jones Act has come under assault like I’ve never seen before. It began when three powerful hurricanes hammered our southern coasts and the Caribbean and it continues today.

Hurricane Harvey had barely approached Houston when calls for Jones Act waivers began. Yet we never saw a lack of U.S. flag capacity.

In fact, just two days after Maria hit Puerto Rico, U.S.-flag Jones brought cargo into Puerto Rican terminals faster than it could be distributed, as well as supplies that had already been brought in prior to the storm’s arrival.

Yet the Jones Act was blamed in the press for delaying the flow of relief supplies.

For example, you had one reporter on the shoreline in San Juan saying: “but since the president waived the Jones Act, look at all the ships that are arriving now!”
The problem was, this reporter was actually pointing at one of Tote’s new Marlin Class container ships on its way in, with a triple-deck Crowley barge in the background.

Yet in spite of all of the false narratives, the Jones Act and the U.S. Merchant Marine stood tall in the crisis and did its job – and continues to do so.

Losing the Jones Act would mean the loss of American jobs and pose grave risks to our economic security. It would also be devastating to U.S. domestic shipyards and vessel operators.

That’s why my colleagues and I at the Maritime Administration continue to educate both our stakeholders and the public on this issue. The stakes for our nation are incredibly high.

Just as the stakes for preserving a vibrant, profitable tugboat, towboat and barge industry are equally high.

Which is why all of us at the Maritime Administration and at the U.S. department of Transportation continue to work on your behalf, to do everything in our power to help you continue this growth and success.

We’re in this together, and we need your industry to stay strong. We need you to continue to support our economy, especially with the increased volumes of domestic freight coming our way over the next 30 years. This industry is a strategic asset to the nation.

It has been an honor to talk with you today. The AWO is an important partner to the Maritime Administration, and to our nation. Thank you again for your service and your contributions.

Updated: Monday, November 19, 2018